III. Transfer IRS Office of Chief Inspector Function to Treasury Inspector General

A. Transfer IRS Internal Security and portions of Internal Audit to the Treasury Inspector General.

The Commissioner will retain an appropriate number of internal auditors for management matters. At least 900 of the approximately 1200 Treasury Inspector General FTEs must be dedicated to IRS matters.

B. The Treasury Inspector General will be appointed by the President and confirmed by the Senate. 

In addition to the standard qualifications for an Inspector General (e.g., appointed solely on the basis of integrity and demonstrated successful ability in accounting, auditing, financial analysis, law, management analysis, public administration, or investigations), the Treasury Inspector General must have experience in tax administration and the demonstrated ability to lead a significant organization.

C. The Treasury Inspector General, Deputy Inspector General, and two Assistant Deputies (Auditing and Inspection) may not be employed by the IRS within 2 years before and 5 years after working at the Treasury Inspector General's office.

D. The Treasury Inspector General must have access to tax return and return information.

E. Congress must be notified if the Secretary interferes with an ongoing investigation.

F. In addition to standard reporting requirements the Treasury Inspector General should be responsible for reporting:

1. The number of taxpayer complaints during the period;

2. The number of employee misconduct and taxpayer abuse allegations received during the period from taxpayers, IRS employees, and other sources;

3. The current status of each complaint and allegation;

4. The disposition of each complaint including the outcome of any Justice Department action and any monies paid to settle suits; and

5. Whether restrictions on the use of enforcement statistics to evaluate IRS employees are being followed and that required procedures to protect taxpayer rights during collection enforcement actions are being followed.